Senior reporter for The Canberra Times

The ACT has the nation's strongest housing construction but the softer job market could have knock-on effects across the territory's economy, according to a report to be published on Monday.

Overall the ACT economy is the third strongest, according to CommSec, which judged performance on eight indicators.

Western Australia remains the standout, leading the nation and coming first in four categories - retail trade, equipment investment, construction work done and population growth.

The Northern Territory is ahead of the ACT followed by Queensland, Victoria and NSW with little to separate them, and then a sizeable gap to South Australia followed by Tasmania.

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CommSec uses decade averages to judge the ''normal'' performance.

Looking ahead, the economic forecaster expects little change in the rankings but the NT has the greatest scope for further improvement.

''The ACT economy remains third with the main strengths being dwelling starts and population growth but while unemployment is still lower than most states, it is well above 'normal' for the ACT,'' the report says.

The trend jobless rate in the ACT of 4.2 per cent is lower than all economies except the NT but compared with its 'normal' or decade-long average rate of 3.4 per cent, the jobless rate is higher in percentage terms than all other economies, affecting activity in the retail sector, CommSec says.

The national outlook for housing construction remains weak but the report says there are reasons for optimism.

''Dwelling starts are still above decade averages in three of the states and territories and again starts in three states and territories are above levels of a year ago,'' it says.

''The ACT is in the strongest position for new housing construction but activity continues to ease from highs.

''In the September quarter the number of dwellings started was 33.5 per cent higher than its decade average although starts in the quarter were almost 15 per cent down on a year earlier.

''Real wages were positive in all economies in the September quarter; strongest growth occurred in the ACT (2.7 percentage points).''

The ACT is ranked second on population growth and third on economic growth.

''The ACT remains in third spot on housing finance, down 6 per cent on the decade average, followed by NSW, down 12.4 per cent.

The focus of the Australian

sharemarket this week will be on the consumer price index and inflation figures to be released on Wednesday.

CommSec economist Craig James said he expected inflation to be fairly benign, with the underlying rate predicted to rise 0.6 of 1 per cent to around 2.5 per cent. ''The Reserve Bank at the moment wouldn't have any real concern with inflation,'' he said on Sunday.

''Because inflation is under control that leaves the door open for rate cuts should they become necessary, but I think given the optimism we're seeing globally, the potential for improvement here domestically with the home market, the Reserve Bank is probably going to remain on the interest rate sidelines.''

Treasurer Wayne Swan used his weekly economic newsletter to defend the government's economic management, saying the national jobless rate of 5.4 per cent remained one of the lowest in the industrialised world.

''Our economy has also added more than 800,000 jobs over the past five years, while tens of millions have been lost around the world,'' he said.

5 comments

Dear ACT, Please ignore concocted CommSec 'report'. It's designed to push CBA profit-making criteria like housing sprawl. Hardly good for Canberrans... but GREAT for bank lending/profits!

Commenter

Join the dots

Date and time

January 21, 2013, 9:07AM

Unfortunately This article fails to state that Canberra is a unique state, isolated by everyone else and only loved internally. Firstly it does not address how demand is going to be absorbed. Many projects in the capital have been stopped, land banking big developers are going to be in for a rude shock when property prices don't go up and housing demand stays still. Secondly how is the capital going to help absorb demand from our closest state NSW- with a drop in jobs and an infrastructure that does not support a fast run to Sydney. I believe unfortunately we could be left in a conundrum for a long while. Rurmour has it- they will house refugees and provide housing. Well it could well be a great training ground, but I hardly believe that will absorb the huge over supply in housing. my prediction another drop of 20-30% in the next five years.

Commenter

Mertonian

Location

Canberra

Date and time

January 21, 2013, 9:43AM

So, the article called "ACT falls off investment hotspot list", also in thisedition, is not correct?

They can't both be true, can they?

Commenter

Nimby

Date and time

January 21, 2013, 10:08AM

Well spotted NIMBY - I saw that too. Also that Canberra has not received any petrol price releif and have been paying 10 - 17c more a litre than perhaps we should have.

Commenter

Outraged of Palmerston

Date and time

January 21, 2013, 4:41PM

Or is it because developers believe the federal government will keep on employing public servants to reduce the national unemployment rate?